The Central Area of Arulion was actually more of a city than half of a kingdom. There were definitely swatches of untouched land here and there, but for the most part, the central region was both developed and connected.
Dragons very much valued their true forms over their humanoid forms, however, the old tradition of building nests in caves was simply too outdated. As the independent beasts formed a society, they were forced to change a lot of their ways to accommodate more people.
The Holy Dragons and the strongest beings under them were given the privilege of moving around in dragon form whenever they wanted. It was possible for others to earn time they could spend transformed, but it was an expensive privilege and often used to identify the upper class.
Even if they were called dragon royalty to those in the outside world, the majority of the True Dragons who were able to live in the central region were still just regular middle-class citizens.